United States v. All Funds on Deposit with O'Brien & Associates
892 F. Supp. 2d 1038
N.D. Ill.2012Background
- US filed in rem forfeiture action (Case No. 11 C 4175) seeking ~$6.6 million in futures accounts linked to Al Qaeda-associated funds.
- Insurance claimants seeking damages from 9/11 claims moved to participate; court struck their claims and denied intervention in March 2012.
- Claimants later registered a NY judgment in this district (Case No. 12 C 1346) and obtained a writ of execution and citation to discover assets against the defendant funds.
- Funds were blocked assets under IEEPA, later blocked under TRIA, with the government maintaining custody since July 2011.
- TRIA authorizes execution against blocked assets notwithstanding any other law; government moved to quash, claimants moved to amend; court denied quash and granted amendment.
- Court held TRIA supersedes conflicting statutes, allowing claimants to amend and pursue their interests in the forfeiture proceeding.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does TRIA waive sovereign immunity for execution on blocked assets? | Claimants argue TRIA permits execution against blocked assets notwithstanding other laws. | Government contends TRIA does not unequivocally waive sovereign immunity or apply to current assets after confiscation. | TRIA unequivocally waives sovereign immunity for execution against blocked assets. |
| Do the writ and citation violate prior exclusive jurisdiction or in custodia legis doctrine? | TRIA permits execution notwithstanding other laws, superseding such doctrines. | These doctrines could bar two courts from exercising jurisdiction over the res. | Notwithstanding TRIA, claimants may proceed; those doctrines do not bar execution or citation here. |
| Did claimants have Article III standing when claims were filed? | Claimants had an injury-in-fact and sufficient interest at filing to contest forfeiture. | Claimants lacked any interest at filing, thus no Article III standing initially. | Claimants had Article III standing at the time of filing; injury and redressability satisfied. |
| Do claimants have statutory standing to amend and participate in the forfeiture? | TRIA allows amendment; lien via citation creates an interest sufficient for statutory standing. | Interest must exist before the forfeiture action; post-initiation liens do not establish statutory standing. | Claimants have statutory standing; TRIA overrides time-relations and supports amendment. |
| Do claimants have prudential standing to raise a claim under the innocent owner defense? | TRIA overrides conflicting rules; claimants have a protected interest and can invoke relief. | They lack innocent owner status under 18 U.S.C. § 983(d). | Claimants have prudential standing; TRIA supersedes conflicting limitations. |
Key Cases Cited
- Smith v. Federal Reserve Bank of New York, 346 F.3d 264 (2d Cir. 2003) (TRIA enforcement against blocked assets and sovereign immunity discussed)
- Weinstein v. Islamic Republic of Iran, 609 F.3d 43 (2d Cir. 2010) (TRIA interpretation and conflicts with other laws)
- Bennett v. Islamic Republic of Iran, 618 F.3d 19 (D.C. Cir. 2010) (TRIA not limited by conflicting laws; assets in government control)
- Smith v. Fed. Reserve Bank of New York, 346 F.3d 264 (2d Cir. 2003) (TRIA permits enforcement against blocked assets)
- United States v. 5 S 351 Tut-thill Rd., 233 F.3d 1017 (7th Cir. 2000) (undemanding Article III standing standard in forfeiture)
- United States v. One-Sixth Share of James J. Bulger in All Present and Future Proceeds of Mass Millions Lottery Ticket No. M246233, 326 F.3d 36 (1st Cir. 2003) (standing and interests in forfeiture context)
- United States v. $500,000.00, 591 F.3d 402 (5th Cir. 2009) (standing requirements in forfeiture actions)
- Cisneros v. Alpine Ridge Group, 508 U.S. 10 (U.S. 1993) (notwithstanding clause interpretation)